LONDON, April 20 (Reuters) - Hedge funds lost out on Tuesday
after British Prime Minister Theresa May shocked markets by
calling a snap election, but those led by humans outsmarted
those led by machines, in a reversal of fortunes from the Brexit
referendum.

While computer-driven hedge funds garnered plaudits for
their outperformance in the wake of Britain's shock vote to
leave the European Union last year, this year's first major test
resulted in big losses.

Among the most high-profile losers was New York-based
investment firm AQR Capital Management's $13.3 billion
computer-driven Managed Futures Strategy, which lost 1.1 percent
on Tuesday, according to an investor who was told by the hedge
fund, representing a loss of more than $130 million.

The same strategy made 5.2 percent on the day the results of
Britain's EU referendum were revealed in June.

"The announcement of the general election was a turnaround
for markets, leading to a trend reversal across UK assets, which
hurts computer-driven hedge funds most," said Philippe Ferreira,
head of hedge funds research at Lyxor Asset Management.

Most of the hedge fund strategies run by machines that lost
out from these moves did so because their algorithms simply
follow market momentum. A break in the trends that those
algorithms have spotted, therefore, tends to hurt them.

Tuesday's surprise announcement sent sterling soaring to a
six-month high above $1.29 with the currency jumping above its
200-day moving average and breaking the trading range of between
$1.20 and $1.28 that had been in place since early October.

And Britain's FTSE 100 stock index, which tends to move
inversely to the pound, suffered its heftiest falls since the
days following the Brexit vote, having hit record highs just
last month.

Other computer-driven - or "quant" - hedge funds to lose out
included Candriam Alternative Systematic, which lost 0.9 percent
on Tuesday, with the steep fall in the FTSE penalising its
positions, according to a spokesman at the firm. Harmonic
Capital was also marginally negative on the day, it said.

Two other hedge funds run by machines, which the investor
declined to name, lost 2.8 percent and 1.9 percent.

MACHINES "DON'T GET EMOTIONAL"

Some computer-driven funds put on additional short positions
in response to the news that there was set to be an announcement
from the prime minister, amid speculation the news was set to be
negative, such as that she was suffering from ill health.

"That element of uncertainty creates a sell signal - that
might explain why (the computer-driven funds) didn’t do as well
as the macro guys," said Mizuho's head of hedge fund currency
sales in London, Neil Jones.

Computer-driven funds tend to mainly tracks general trends
while human traders anticipate and react to macroeconomic events
in the case of discretionary macro managers.

"The macro people are much more likely to wait to see what
the announcement is, analyse that, and then make a trading
decision."

Human-led macro hedge funds, which mainly carry out bets
through currencies and bonds, lost out but to a lesser degree on
Tuesday.

"On performance of macro versus quant...discretionary macros
were burned earlier this year so reduced risk, while quants tend
to be always in the market -- machines target risk and don't get
emotional," said Cedric Fontanille, director at Unigestion.

Hugh Hendry's Eclectica Asset Management lost 0.1 percent in
its CF Eclectica Absolute Macro Fund for example, confirmed a
spokesman at the firm, though he said the fund was not betting
on sterling and had little direct exposure to the UK.